Overview

[1] The issue on this appeal is whether the trial judge erred in his finding that the appellant Dawn Marie Bennett (Ms. Bennett) was lawfully dismissed from her employment for just cause by her employer, the respondent Karen Rosalee Cunningham (Ms. Cunningham).

[2] Ms. Bennett worked for Ms. Cunningham, as a junior lawyer in her law office for a 6 month period from July 8, 2002 to January 10, 2003. Ms. Bennett was summarily dismissed primarily because of a strongly worded letter dated December 21, 2002 which she wrote to Ms. Cunningham. The letter complained of certain administrative problems in her job and contained a sentence which read “As my income depends solely on my billable hours docketed and collected, the monetary gain to you is both dishonest and negligent”.

[3] Before this Court there is no challenge to the trial judge’s findings that (1) Ms. Bennett was an employee and not an independent contractor; (2) that the contract of employment accordingly contained an implied obligation to terminate only upon reasonable notice, in the absence of just cause and (3) that the reasonable notice period was 4 months. The parties also do not challenge the trial judge’s finding that the damages incurred by Ms. Bennett referable to the notice period, net of mitigating income, were $17,065.00 and in addition she was owed income of $18,545.73 for unpaid fees billed and collected for the period prior to her termination.

The Facts

[4] Ms. Bennett received her call to the bar in 2001. Prior to working for Ms. Cunningham, her entire working experience as a lawyer consisted of a 9 month contract to work in a law office to replace a lawyer on maternity leave. Ms. Bennett had been out of work for 5 months before she secured the position in Ms. Cunningham’s office.

[5] The trial judge concisely summarized the events leading up to the point at which Ms. Bennett delivered the offending letter to her employer, as follows:

3 [Ms. Bennett] applied to Ms. Cunningham for the position of junior associate lawyer to practice in civil litigation. Ms. Cunningham interviewed her on July 4, 2002, and offered her the position.

4 They discussed two schemes of remuneration. On July 8, 2002, Ms. Bennett accepted the offer to work and elected to be remunerated under the first scheme. Ms. Bennett was to be paid 50% of all fees billed and collected. She would receive advances on commission at the rate of $38,000 per year. Ms. Bennett would be responsible for the payment of standard employee deductions, her Law Society fees and liability insurance premiums.

5 Ms. Bennett began work on July 15, 2002. During her first morning of work, Ms. Cunningham presented her with a written agreement specifying the terms of the position. The written agreement contained a number of provisions that had not been discussed during either the interview or the subsequent telephone conversation when Ms. Bennett accepted the position. Ms. Bennett signed the agreement.

6 Ms. Bennett immediately assumed responsibility for a number of files, the majority of which were family law cases, an area in which she had little experience. The office was busy. Ms. Bennett worked long hours from Monday to Friday, and often on weekends. She became concerned that Ms. Cunningham was not providing her with the tools she required to do her work. Her concerns focused on the paucity of office resources available to her and the inadequacy of the technology in place.

7 Ms. Bennett prepared a proposed business plan to address those concerns. She met with Ms. Cunningham in mid-August 2002 to discuss them. In addition to office resource and technology issues, Ms. Bennett expressed concern that she had been asked to sign a written agreement relating to her position on such short notice, particularly when there had been no mention of a written agreement during the interview or at the time of the job offer.

8 In response Ms. Bennett's concerns, Ms. Cunningham had the staff attend at the office on a Saturday after her meeting with Ms. Bennett. They identified and listed the files assigned to Ms. Bennett. Ms. Cunningham invested in voice mail and software known as Amicus Attorney. She also adopted Ms. Bennett's suggestion that each file contain a sub-folder for lawyer's notes.

9 Prior to the introduction of the Amicus Attorney software, Ms. Bennett had submitted handwritten dockets for the time spent on all files she worked on. The receptionist was responsible for entering the dockets into the office computer for file and billing purposes. The receptionist retired suddenly about August 22, 2002, and was not replaced until September 1, 2002.

10 Ms. Cunningham met with Ms. Bennett on the evening of November 5, 2002. Ms. Bennett expressed concern that, while her share of fees billed was about $26,500, only $2,650 had been collected. She was also concerned about whether all her time dockets had been entered. A subsequent comparison of the handwritten documents with the computer records for her files confirmed that 42.8 hours of her docketed time had not been entered in the computer.

11 The two lawyers met again on December 16, 2002. Ms. Bennett remained concerned. The gap between fees billed and collected had increased; after five months, the advances paid to Ms. Bennett exceeded her share of fees collected by about $10,000. She asked Ms. Cunningham for a legal assistant. Ms. Cunningham told her that if she wanted one, she would have to bear the cost from her commission income.

12 Prior to this meeting, Ms. Bennett had pulled some accounts rendered and discovered a number of instances where time she had docketed had been credited to Ms. Cunningham. When she learned of this, Ms. Cunningham told Ms. Bennett that these errors would be corrected upon receipt of copies of the accounts where such errors had occurred.

13 Ms. Bennett met with Ms. Cunningham on Saturday morning, December 21, 2002, just prior to Ms. Cunningham leaving on a Christmas vacation. She handed Ms. Cunningham a four-page letter dated December 21, 2002, which documented nine areas of concern. She also sent her a copy by registered mail. In the letter, Ms. Bennett made a number of statements that Ms. Cunningham claimed were untrue. Under the heading "Docketing System", Ms. Bennett accused Ms. Cunningham of being dishonest and negligent. The letter contained other comments suggesting that Ms. Cunningham was disorganized and incompetent.

[6] Much of the trial and of the trial judge’s reasons were directed to the issue of whether Ms. Bennett was an employee or an independent contractor. As noted, Ms. Bennett was successful on this issue, the court holding that she was either an employee or in an intermediate category and in any event entitled to reasonable notice of termination, in the absence of just cause for dismissal.

[7] On the issue of cause for dismissal, the trial judge held that there was just cause based on Ms. Bennett’s December 21, 2002 letter to Ms. Cunningham, which suggested that Ms. Cunningham was, in the trial judge’s words, “disorganized, incompetent and dishonest with respect to docketing issues”.

[8] Before this Court, Ms. Bennett submits that the trial judge erred in finding just cause for dismissal in view of the absence of any discussion with Ms. Bennett following receipt of the letter, the lack of any prior discipline, and, most importantly, the failure of the trial judge to apply the contextual approach to the determination of whether just cause existed, as required by the Supreme Court of Canada in McKinley v. BC Tel., 2001 SCC 38, [2001] 2 SCR 161 and by the Ontario Court of Appeal in Dowling v. Ontario (Workplace Safety and Insurance Board), (2004) 2004 43692 (ON CA), 246 D.L.R. (4th) 65.

[9] I agree with the appellant Ms. Bennett’s submission that there was an absence of the required contextual analysis concerning the cause for dismissal in this case and that such an analysis would have led to the finding that her letter of December 21, 2002 did not warrant dismissal for cause. I would allow the appeal for the reasons explained below.

Analysis

[10] The first issue is the applicable standard of review of the trial judge’s decision. I accept the submission of the respondent Ms. Cunningham that a finding of just cause for dismissal is primarily a determination of fact, or at best, a question of mixed fact and law. In either case, it is well settled that a trial judge’s determination of such issues is entitled to substantial deference and indeed an appellate court may revise the decision made at first instance only in the event of an overriding and palpable error, see UBS Securities Canada Inc. v. Sands Brothers Canada, Ltd. (2009), 95 OR (3d) at paras. 57 and 61 (ONCA).

[11] I am of the opinion that a failure to apply a contextual approach to a determination of just cause for dismissal, as mandated by the Supreme Court of Canada in McIntyre, is an error of principle and constitutes an overriding and palpable error justifying appellate intervention, see Henry v. Foxco Ltd. (2004), 2004 NBCA 22, 31 C.C.E.L. (3d) 72 (NBCA).

[12] Care must be taken however, not to embark on a re-evaluation of the evidence or a re-assessment of issues of credibility. With these restrictions in mind, I review the trial judge’s findings on the issue of just cause.

[13] The trial judge correctly stated that the onus is on an employer to justify the summary dismissal of an employee. He found that the incident that gave rise to the summary dismissal was Ms. Bennett’s 4 page letter to Ms. Cunningham dated December 21, 2002. He characterized the letter as follows:

The overall tone of the letter was anything but courteous. It was critical. It was accusatory. It was disrespectful. The letter suggested that Ms. Cunningham was disorganized, incompetent, dishonest and negligent.

[14] In argument of this appeal, respondent’s counsel particularly emphasized the “dishonest and negligent” reference in paragraph 3 of the December 21, 2002 letter, which I quote:

DOCKETING SYSTEM – Many of the dockets that were entered by hand were credited to your dockets instead of my dockets. There has been no attempt on your part to reconcile these problems despite my repeated and numerous requests. As my income depends solely on my billable hours docketed and collected, the monetary gain to you is both dishonest and negligent. I have no control over the docketing system. It is your system. As a result of your flawed docketing system you have gained income that should be attributed to me. I need an accurate reconciliation of the docketing system to reflect my dockets. (my underlining)

[15] While the trial judge did not focus specifically on the “dishonest and negligent” reference in the 4 page letter, he concluded that the letter constituted “insolence”. The trial judge’s explanation of “insolence” was the following:

34 In an employment relationship context, insolence has been described as derisive, contemptuous or abusive language or conduct directed by an employee at his/her employer. Generally, two or more instances of insolence are required to justify summary dismissal. However, a single incident of insolence will justify summary dismissal if the employer and employee are no longer capable of maintaining a working relationship.

And at paragraph 43 the trial judge stated:

43 I find that the contents and tone of the letter constituted serious misconduct on the part of Ms. Bennett. The insolence was not reconcilable with maintaining the employment relationship.

[16] The trial judge found that the letter was highly critical of the operations in the law office and of Ms. Cunningham’s integrity. He stated that the comments and accusations in the letter undermined the confidence Ms. Cunningham had in Ms. Bennett and destroyed the employment relationship.

[17] On my review of the letter, the ‘dishonest and negligent’ reference, which appears only once in this lengthy letter, is the only expression which could reasonably be considered insolent by the trial judge’s definition. The balance of the 4 page letter was in part highly critical, but not insolent. Ms. Bennett did characterize some aspects of the office problems as “unacceptable” which is a strong but hardly an offensive term. On the other hand, she used the words “please” or “kindly” to preface each one of her requests.

[18] The trial judge did not refer to the governing decisions in McKinley or Dowling and no reference is made to the need for a contextual approach to the issue of termination for cause.

[19] In McKinley, the Supreme Court of Canada prescribed an analytical framework and a two-step test, termed a “contextual approach”, for a trial court to follow when deciding whether an employer had just cause to dismiss an employee “owing in large measure, to the court’s deep concern over the power imbalance in the employment relationship and the unique nature of the employment contract”. The importance of this balance is better understood by considering the sense of identity and self-worth individuals frequently derive from their employment. By the “contextual approach” the Supreme Court of Canada requires a trial court to consider not just whether an employee may be found guilty of misconduct giving rise to just cause dismissal, but also whether the nature and the degree of the misconduct warranted the employee’s summary dismissal.

[20] Since McKinley, the courts are required to apply the contextual approach to all just cause cases and not just those involving allegations of dishonesty, as was alleged in McKinley. In Dowling v. Ontario (Workplace Safety and Insurance Board), the court held that the application of the contextual standard required:

(a) determining the nature and extent of the misconduct;

(b) considering the surrounding circumstances; and

[21] In fairness to the trial judge, he looked at the context of this letter in one important respect. After reviewing the evidence and concluding that Ms. Bennett’s administrative complaints in her letter were overstated or unjustified to a considerable extent, he stated (at paragraph 41), “The relationship between lawyers practicing in the same law office is fundamentally based on confidence, respect and trust”.

[22] I agree with the trial judge’s characterization of the professional environment required in a law office. Insolence or a lack of civility in general has the tendency to undermine professional relationships. It is this important message which the Law Society, the Advocates Society and other legal organizations in this jurisdiction have attempted to promote. On the other hand, when the issue as here is dismissal for cause, a lawyer working in a law office or other professional environment is entitled to have her conduct evaluated in light of the full context of the relevant circumstances. As in other employment relationships, there remains a power imbalance and there is a strong policy interest in encouraging open and frank discussion between employer and employee of workplace issues.

[23] Apart from the trial judge’s assessment of the letter and his observation concerning the law office environment, there was no discussion of the context in which he found the letter to constitute sufficient insolence to justify summary dismissal. Significantly, he failed to give any weight to the closing sentence of Ms. Bennett’s letter, which said:

I would like to work together with you to resolve these issues. Kindly contact me so that we may work together to make this arrangement a successful one for both of us.

[24] A careful contextual analysis of this case was required. As to the letter in question, while harshly worded, it was a private written communication between employee and employer focused solely on office administrative issues. It was not disclosed to third parties, nor was it intended to be. On the evidence the employer was not embarrassed, nor caused financial loss. The employer’s ability to manage and command the respect of staff or clients was not compromised.

[25] The content of this lengthy letter was important. It addressed administrative issues relating to Ms. Bennett’s docketing requirements and compensation arrangements, which were matters of legitimate and pressing importance to her. The points raised were follow ups to 2 previous office meetings and discussions. The paragraph headings in the letter illustrate the legitimate subject matter of the issues Ms. Bennett raised. They were:

EMPLOYMENT CONTRACT
CLIENT FILE RESPONSIBILITY
DOCKETING SYSTEM
BILLING SYSTEM
CLIENT ACCOUNTS
LEGAL ASSISTANT
FILING SYSTEM
REMUNERATION
PAYMENT OF REMUNERATION

[26] Ms. Bennett was, to the employer’s knowledge, struggling in her practice. On the existing accounting data Ms. Bennett perceived herself to be getting into a serious financial situation given her lack of collected billings in relation to the commission draw for which she was accountable and in relation to pending Law Society and insurance premiums, soon to be due and payable by her. There had been real and legitimate technology and accounting problems in the office which Ms. Cunningham had recognized, but as the trial judge found, significant steps to remedy these problems had been taken. Ms. Bennett honestly but, on the trial judge’s analysis, mistakenly felt these to be serious continuing problems that compromised her professional practice. Significantly, the trial judge did not make any finding of dishonesty or bad faith against Ms. Bennett on these or any other issues.

[27] Further, as the trial judge noted, Ms. Bennett was working very long hours and lacked experience in family law. He stated that Ms. Bennett “professed frustration and worry about her ability to pay pending bills”, although he did not find this to be objectively reasonable nor an excuse for writing the letter. The trial judge did not explain why this single incident or the lack of any prior or progressive discipline should not mitigate the situation. The trial judge accepted Ms. Cunningham’s conclusion that after considering the implications of the letter, she could no longer have a working relationship with Ms. Bennett.

[28] Respectfully however, the question was not whether Ms. Cunningham’s conclusion was reasonable, because as employer she had the right to terminate the employment of Ms. Bennett with reasonable advance notice or severance pay in lieu of notice, if she had lost confidence in her. The question was whether this letter, in light of the contents as a whole and considered in the light of all the circumstances, made the continuance of the employment relationship impossible or destroyed that relationship. In my opinion, this should have been answered in the negative in all of the circumstances and in the spirit of Ms. Bennett’s concluding statement in the letter that she wished to “resolve these issues” in order to achieve a successful working relationship.

[29] Ms. Bennett also advances an alternative argument, which is that if her letter amounted to just cause for dismissal, such cause was condoned by Ms. Cunningham because she was permitted to continue to work at the law office and serve the firm’s clients for a period of 11 working days following the delivery of the letter. I do not accept this submission. The question of whether misconduct has been condoned so as to be no longer capable of constituting just cause for dismissal is a question of fact. In addition, this argument was not commented on by the trial judge. I see no overriding or palpable error in the trial judge not giving effect to this argument. In any event, the timing of the delivery of the letter, Ms. Cunningham’s departure on vacation and the firm’s continuing responsibility to its clients, adequately explain why Ms. Cunningham allowed Ms. Bennett to remain for these additional working days after she received the offending letter. I am of the opinion that there was no condonation here.

[30] However, I would view Ms. Bennett’s continuation on staff for this 11 day period, and discharging professional services to the firm’s clients, as an additional contextual factor supporting the conclusion that Ms. Bennett’s intemperate letter did not create a situation in which the trust required in this employment context should be viewed as irreparably destroyed.

[31] In summary, I am of the opinion that the appeal must be allowed and the trial judgment varied to allow the appellant Ms. Bennett’s claim for damages in lieu of reasonable notice of termination, in the sum of $17,065, together with pre-judgment interest pursuant to the Courts of Justice Act.

[32] If the appellant wishes to seek costs of this appeal, she may provide concise written submissions to this Court within 30 days of the release of these reasons. The respondent may respond within 30 days of the receipt of the appellant’s submission.

Hackland R.S.J.

Harvison Young J.

Whitaker J.

Released: January 19, 2011

CITATION: Bennett v. Cunningham, 2010 ONSC 28

DIVISIONAL COURT FILE NO.: DC-07-0026-ML

DATE: 20110119

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

HACKLAND R.S.J., HARVISON YOUNG

and WHITAKER JJ.

BETWEEN:

DAWN MARIE BENNETT

and –

KAREN ROSALEE CUNNINGHAM

DECISION

Hackland R.S.J.

Harvison Young J.

Whitaker J.

Released: January 19, 2011

Dawn Marie Bennett v. Karen Rosalee Cunningham, 2011 ONSC 28

Case Summary

Overview

The Facts

Analysis

Judges

Counsel

Parties

Areas of Law

Fact Patterns

Financial Outcomes

Issues

Legal Tests 2